Tunisia - Politics, government, and taxation

After gaining independence from France on 25 March 1956, Tunisia became
a republic headed by President Habib Bourguiba, who promptly assumed the
title, "president for life." Since his ascension to
office, Tunisia has been largely a 1-party state. The president's
left-wing party, the Socialist Destourien Party (PSD), is dominated
political life and punished its opponents with censorship and
imprisonment. The 1960s saw a short-lived
socialist
experiment that finally gave way to increased economic
liberalization
in the 1970s under the influence of Prime Minister Hedi Nouira. By the
middle of the 1980s, the state started to face serious problems as the
ailing Bourguiba became increasingly unable to effectively rule the
country. Bourguiba's presidency was marked by serious economic
instability towards the end of the 1980s, followed by serious civil
unrest. A party called the Islamic Movement (MTI), an effective
organization with a large base of support, challenged the
government's stability. In response to this movement, the
president appointed General Zine al-Abidine Ben Ali, a former head of
the security services, to be the minister of the interior. His main task
was to dismantle the MTI. Following thousands of arrests and the
successful dismantling of the MTI, the president appointed Ben Ali the
prime minister.

According to the terms of the Tunisian Constitution and based on the
opinion of a team of medical doctors who declared Bourguiba unfit to
govern, Prime Minister Zine El Abidine Ben Ali assumed the
duties
of president on 7 November 1987. Ben Ali started to dismantle the old
oppressive regime by allowing increased freedom of the press, releasing
political prisoners, and legalizing political parties. The PSD party was
renamed the Rassemblement Constitutionnel Democratique (RCD) and
legislation was passed implementing a multi-party system. Today there
are 6 legal opposition parties in Tunisia, but most of them lack the
necessary resources to be effective, and they are still prohibited from
criticizing government policies. President Ben Ali's government
has brought with it economic and political stability, focusing
extensively on health care, women's rights, and education.
Despite these reforms, Tunisia is still essentially a 1-party state.

The principle source of revenue for the Tunisian government is taxation.
According to the EIU Country Profile, more than 50 percent of government
revenues come from
direct taxation
and 40 percent from domestic or foreign borrowing. In 2000, the
corporate rate of taxation in Tunisia was set at 35 percent, except for
those businesses involved in the fishing, agriculture, or handi-craft
industries, which are taxed at a 10 percent rate. Normal business
expenditures such as depreciation (the decline in value of a physical
asset as it is used over time), social security contributions, and costs
are deductible. Due to generous government incentives, exporting
businesses are exempt from all major taxes in Tunisia. Personal
income tax
is paid on a progressive basis ranging from 15 to 35 percent.
Non-residents have to pay tax only on income earned from Tunisian
sources. There is a 17 percent
value-added tax
(VAT) on sales that is applicable to most items and transactions.